Jul. 22, 2014
|

by Jefferson Graham, USA TODAY

by Jefferson Graham, USA TODAY

LOS ANGELES -- Even with consumers waiting for a new iPhone, they reached into their pockets and continued buying the iconic device between April and June.

Apple said it generated $37.4 billion in revenue and a profit of $7.7 billion ($1.28 per share) in the fiscal 2014 third quarter, up from $35.3 billion and $6.9 billion ($1.07) in the year-ago quarter, mostly fueled by iPhone sales.

The earnings slightly exceeded analyst estimates.

Apple shares slid 0.46% to $94.31 in after-hours trading. The company announced results after markets closed.

Guidance for the coming quarter is revenue between $37 billion and $40 billion.

The company said it sold 35.2 million iPhones in the quarter, which is historically weaker than the end of the year and first quarter, when most new iPhones are sold. iPhone unit shipments were up 13% from the year-ago quarter, when Apple sold 31.2 million units.

Sales for the iPad tablet were a major weak point. Apple said it sold 13.2 million iPads, down 9% from a year ago.

What happened to the tablet, which has now sold more than 225 million units since being introduced in 2010? It still has a healthy, but declining 51.8% market share, according to researcher eMarketer. For starters, low-price tablets from Google, Amazon.com and Samsung Electronics have eaten into sales, and some customers felt they didn't needed an iPad upgrade.

On a conference call with analysts Tuesday, Apple CEO Tim Cook said he believes it's still "early days" for iPad, with "significant innovation" to come. He cited the recent partnership with IBM to create apps for enterprise as a deal that will help get more iPads in businesses' hands.

Since last quarter, Apple agreed to shell out $3 billion to purchase Beats Electronics, which makes the popular Beats by Dr. Dre headphones and the Beats Music subscription service, a deal Cook said would close during the current quarter.

Additionally, the company staged its annual developers conference in San Francisco last month, where it previewed the mobile software update for iPhones, iPads and the iPod Touch, iOS8, which will be launched in the fall.

The new IOS will feature apps that tap various health and security apps into one place, and have the ability, for the first time, to have an app open up within another app.

Looking ahead to the fall, "We believe the playbook going into September is the same as years past for expected product launches," Gene Munster, an analyst with Piper Jaffray, said in a note to investors.

Apple is expected to introduce a new iPhone with a larger screen. The new iPhone 6, as it's expected to be called, will have two editions, both larger than the current 4-inch LCD screen iPhone. Additionally, Apple historically releases new iPad tablets a few weeks later, in October, and this year it's expected to add to its portfolio with a "smartwatch" that analysts have dubbed iWatch. Patent papers suggest the name may be iTime.

A filing for the new watch with the U.S. Patent Office was discovered Tuesday by the AppleInsider blog and widely reported.

The new watch would be the first new product introduction for Cook, since he replaced the late Steve Jobs in 2011. All other introductions have been updates on older products.

According to researcher eMarketer, Google continues to dominate smartphone market share, with 50% in 2014, while Apple has 40.5%, up from 36.5% in 2012. Android was at 43.5% in 2012.

The iPad isn't as huge a hit for Apple as it once was, but it's still thriving. Apple's tablet market share will fall to 51.8% this year, from 54.5% last year, says eMarketer.